Antitrust & Competition Policy Blog

Cross-Border Mergers in the EU: The Commission v. the Member States

Posted by D. Daniel Sokol

Michael Harker of the Univeristy of East Anglia - Norwich Law School writes on Cross-Border Mergers in the EU: The Commission v. the Member States in the most recent issue of the European Competition Journal.

ABSTRACT: This paper reviews and analyses cases where the Commission has taken action against Member States where the latter have either acted contrary to the exclusivity principle under the EC merger control regime, or have maintained in place ex ante measures with the purpose of seeking to control or deter cross-border investment in key strategic industries. Subject to very limited circumstances, such measures are contrary to the free movement of capital provisions of the EC Treaty. Nevertheless, on several notable occasions, Member States have been willing to use such powers, seemingly judging the political costs of standing by and permitting the merger to outweigh the (future) costs associated with infringement proceedings before the ECJ. In so doing, Member States have been able to modify transactions significantly and even frustrate them. Such cases pose serious problems for the stability of the EC merger regime, and have implications for the possibilities of expanding Community competence in this area.

UK Final Grocery Investigation is Out

Posted by D. Daniel Sokol

Yesterday the UK Competition Commission released its grocery sector investigation final report.  This is a very important study.  Australia will release its grocery study this summer.  Hopefully these studies (along with the Irish study last month) will improve our sense of how the govercery sector works.

IP as Competition Policy

Posted by Shubha Ghosh

My co-author Richard Gruner invited me to give a distinguished lecture at John Marshall Law School in Chicago this past Monday.  I spoke on the topic of IP as CP:  Competition Policy Norms in Intellectual Property Law.  The talk focused on recent Supreme Court decisions in the area of intellectual property law, particularly, Merck. Independent Ink, eBay, Medimmune, and KSR, and argued that this line of cases illustrates the Supreme Court's concerns with competition norms in intellectual property.   I contrasted the Supreme Court's views on competition with those of the Federal Circuit and used this contrast as background to understand what is at stake in the Quanta v. LG Electronics litigation that is before the Court this term.  An audio file of the talk can be downloaded here [Download JMTalk42808.WMA]  for those who are interested. 

OECD Seeks Head of Competition Outreach

Posted by D. Daniel Sokol

The OECD has a great new opening.  See their ad below.

We are looking for a Head of Competition Outreach with substantial experience in competition policy analysis and the application of competition laws. The selected candidate will be responsible for developing, managing and leading the Division’s capacity building activities throughout the world.  This person will also assist the Head of Division in a variety of tasks supporting the work of the Competition Committee. S/he will also organise meetings and other events relating to competition policy in member and non-member countries. S/he will be expected to work with a large degree of initiative, reporting to the Head of the Competition Division (COMP) in the Directorate for Financial and Enterprise Affairs (DAF).

Job Duties

1. Deliver technical assistance and policy advice
• Organise programmes to increase the capacities of competition enforcement staff and competition policy analysts by creating the structure and content of training programmes and preparing background notes and other technical documents for use in such programmes.
• Provide expert advice to senior competition officials on the drafting and implementation of competition laws, guidelines, commentaries and other official documents.
• Participate in a number of the programmes as chairperson and competition expert.

2.  Management, representation and co-ordination
• Lead the design, management and efficient implementation of OECD's capacity building activities in the area of competition policy.  Prepare activity plans and budgets for all such activities.  Ensure that all such activities, including country specific and regional programmes and all meetings of the Global Forum on Competition, the Latin American Competition Forum and the Seoul and Budapest Regional Centres for Competition are of high quality and delivered on time and within budget. 
• Monitor developments in the field of competition law and policy and support the development of sound competition law and policy in OECD and non-OECD countries. Organise and participate in external meetings on competition law and policy matters for government officials, including preparation of background notes and other technical documents.
• Develop effective working relationships with senior competition officials in OECD and non-OECD delegations and capitals and seek their active support for and involvement in the capacity building programme.
• Maintain effective working relationships with other parts of the Organisation and promote consistent, sound competition policy throughout the Organisation.
• Write documents on competition law and policy in support of the work of the Competition Committee. Prepare briefs and reports for the senior staff of the Organisation.
• Supervise the work of other staff and consultants. Help recruit, train and supervise support staff and trainees.
• Assist the Head of Division in the management of the Competition Division

3.  Programme development
• Maintain close and effective relationships with existing donors and develop new relationships to expand the programme in under-served countries and regions.  Actively engage in fund-raising to support the programme.
• Expand the capacity building programme in co-operation with national competition authorities, regional development banks and donor agencies. 
• Carry out other related duties as assigned.

Qualifications: education, experience, communication and languages

1.  Education and experience
• An advanced degree in law or economics, ideally specialised in competition law or industrial organisation.   
• Eight to ten years of experience in the application of competition law and policy in a national or international administration responsible for the enforcement of competition law or responsible for competition-oriented regulation or similar experience in the competition department of a major law firm.

2.  Key competencies
• Knowledge of substantive, procedural and institutional issues that arise in all aspects of competition law enforcement, including anti-cartel enforcement, merger control and control of abuse of a dominant position. Similar knowledge in the operation of competition advocacy programs. Knowledge of the competition regimes of several OECD Member countries would be an advantage.
• Management and organisational skills, including ability to plan and implement a programme of reviews of national competition laws and policies.  Ability to work efficiently under pressure with the capacity to prioritise tasks often according to tight deadlines.
• Ability to communicate effectively and to present documents and proposals clearly, concisely and convincingly at meetings with senior competition officials.
• A strong political sense and effective diplomatic skills; ability to achieve consensus and interact effectively with multiple high-level stakeholders.
• Demonstrated capacity to think strategically and creatively and strong conceptual and analytical capabilities. 

3.  Communication and OECD official languages
• Capacity to present highly technical subjects in writing as well as orally, in a manner which makes them accessible to high-level officials, political and opinion leaders.  Ability to communicate effectively and to present issues of competition law and policy clearly, concisely and convincingly.
• Very good interpersonal skills. Ability to foster and maintain fruitful working relations with national and international officials. Ability to motivate and supervise within a multicultural team and to adapt to various working methods.
• Excellent knowledge (reading, drafting and speaking) of one of the two official languages of the OECD ( English and French), and good knowledge of the other.

N.B. The appointment may initially be made at the level immediately below if the qualifications and professional experience of the selected applicant correspond to that level;  in this case, the duties and responsibilities assigned to the post will be adjusted accordingly.

Horizontal Merger Simulation: A Complementary Tool to the Structural Analysis

Posted by D. Daniel Sokol

Tarcisio da Graca of the Brazilian Federal Senate writes about Horizontal Merger Simulation: A Complementary Tool to the Structural Analysis.

ABSTRACT: The authorities of the Brazilian competition system decide upon horizontal mergers and acquisitions that come to their review, applying the traditional structural analysis, as established by the Brazilian horizontal merger guidelines. This article aims at illustrating the refinement that can be achieved in the evaluation process of such cases, by using differentiated product horizontal merger simulation models. Applying both methodologies to hypothetical cases, I illustrate that the simulation results provide more precise information about their likely effects with richer details. This may be accomplished by using the same data required for the structural analysis. The use of the simulation model may also contribute to guide the discussion about the impact of the efficiencies generated by a merger and about the role of potential or real entries of new firms in the market place.

Patent Pools, RAND Commitments, and the Problematics of Price Discrimination

Posted by D. Daniel Sokol

Daniel Crane of Cardozo Law School offers insightful analysis in Patent Pools, RAND Commitments, and the Problematics of Price Discrimination.

ABSTRACT: This is a book chapter forthcoming in Working Within the Boundaries of Intellectual Property Law (Harry First, Rochelle Dreyfuss, and Diane Zimmerman, eds., Oxford University Press), which will collect papers from the NYU Engelberg Center's 2007 conference at La Pietra, Florence. The paper highlights the complexities and potential abuses that arise when patent pools are used to implement standards created by standard setting organizations (SSOs). It summarizes the antitrust fixes that have been proposed by the patentees and generally approved by the antitrust agencies. The paper then explores the meaning of the chief antitrust fix - the patentees' commitment to license their patents on reasonable and nondiscriminatory (RAND) terms. The paper concludes by arguing that at least three conditions must be satisified for RAND commitments to be effective fixes: (1) understanding the RAND commitment as a contract enforceable by third parties; (2) placing the burden of justifying the proferred licensing terms on the patent pool; and (3) allowing for meaningful judicial review of licensing decisions by private arbitrators.

A Practical Application of Event Studies in Merger Assessment: Successes and Failures

Posted by D. Daniel Sokol

Ioannis Kokkoris of the OFT and City University weighs in on A Practical Application of Event Studies in Merger Assessment: Successes and Failures.

ABSTRACT:  The stock market‘s reaction to news can be a particularly valuable source of information that may lead to inferences about the nature of a merger or a take-over. The idea underlying event studies is that the reaction of share prices - which reflect expectations about a firm‘s stream of future profits - will allow alternative hypotheses as to the consequences of a merger to be tested. By examining who gains and loses when mergers or merger challenges are announced, different hypotheses can be tested regarding expectations about market power or efficiency. Conducting an event study analysis for the merging parties as well as for rival firms, by comparing their actual stock price returns around the announcement date with a counterfactual measure of what the return would have been had the merger not taken place, would provide useful insights of the likely expectation of the market of the profitability in the post-merger market. This article will analyse the usefulness and efficiency of event studies for mergers and present a tractable way of implementing such analysis. It will include examples of efficient implementation of event studies, as well as, cases where the event study led to less satisfactory results.

The Role of Economic Evidence in Merger Control in Ireland: Current and Future Practice

Posted by D. Daniel Sokol

A new article on The Role of Economic Evidence in Merger Control in Ireland: Current and Future Practice by Brendan O'Connor, Commission for Aviation Regulation; Cormac Keating, The Competition Authority; and Paul K. Gorecki, Competition Authority, Dublin provides us an overview of developments in the Celtic Tiger.

ABSTRACT: Having reviewed some 311 cases notified to the Irish Competition Authority during 2003-2006 this paper examines economic evidence and how it relates to factual and opinion evidence in testing for SLC. The analysis focuses on the use of economic evidence in the assessment of horizontal mergers with unilateral effects and sets out a framework for the application of economic evidence. The authors note that economic evidence was only relied on in a minority of cases, and never in isolation from factual and/or opinion evidence. Having reflected on some of the economic techniques used in Irish merger cases the authors conclude that there may be no more than a limited role for merger simulation models and analysed why, despite an extensive literature on their relevance to merger review, efficiencies have played only a minor role in merger notifications and have not been supported by quantitative evidence. Finally the authors discuss the incentives the underlie competitor and customer opinion evidence and how biases in opinion evidence can be controlled for.

An International Competition Fund For the Developing World?

Posted by D. Daniel Sokol

CUTS is floating an interesting proposal to fund developing world competition agencies through a fund made up of money from fines for developing world cartel overcharges.  See their policy report below.

Download INCSOC_briefing_IntCompFund.pdf 

Thirty Years of Solitude: Antitrust Law and Physican Cartels

Posted by D. Daniel Sokol

Tim Greaney of St. Louis University Law School has an interesting essay on Thirty Years of Solitude: Antitrust Law and Physican Cartels.

ABSTRACT: For over thirty years the United States Department of Justice and Federal Trade Commission (“Agencies”) have confronted bands of businessmen who have steadfastly refused to pay attention to legal precedent, repeated governmental pronouncements, and administrative sanctions imposed on their colleagues. The conduct revealed in these cases evidences a willingness to blatantly disregard the law by repeatedly undertaking arrangements already deemed illegal by the enforcers or by concocting schemes that raise untested but dubious justifications. Who are these lawbreakers? Organized criminals? Internet spam artists? Boiler-room operators? No, these cases involve physicians, some grouped in associations numbering in the thousands and almost always proceeding with the advice of business consultants and counsel. The conduct challenged by the government involves the formation of loosely-structured organizations, ranging from Independent Practice Associations to Preferred Provider Organizations (PPO) to other kinds of loose “networks” that collectively bargain with employers or managed care organizations for provider contracts.

The puzzle explored in this essay is why the government’s deployment of extensive resources has not curtailed physician attempts to engage in collective bargaining and other attempts to restrain price competition. It first analyzes the hypothesis that overly cautious government enforcement policies created a mismatch between penalties and rewards that invited abuse. While finding merit in this explanation, the essay offers a more nuanced account. It suggests that a convergence of factors including doctrinal shortcomings, political pressures, and institutional constraints may have deterred the Agencies from seeking stronger remedies and emboldened parties who questioned the role of competition in health markets generally. A related claim of this essay is that the Agencies may have inadvertently precipitated some of this conduct by the regulatory efforts they have undertaken. Finally, the essay offers some lessons learned from the FTC’s recent North Texas Specialty Physicians case.

Download final_greaney_pdf.pdf